Mobile City Council delays tax vote indefinitely

MOBILE, Alabama -- Mobile’s financial crisis will remain unresolved at least until May, and perhaps well into the summer, as the City Council members continue to struggle to find a compromise with the mayor and each other.

The council was scheduled to vote Tuesday on Mayor Sam Jones’ proposal to increase the city’s sales tax rate by 1 percentage point. That would raise the city’s levy from 4 cents on the dollar to 5. Including county and state taxes, it would push it from 9 cents to 10 cents on every dollar spent on most consumer goods in the city.

Jones withdrew the proposal, however, because the council has been sitting on it so long that part of his tax package has become outdated.

The mayor had hoped to use extra money generated by the new tax in the remainder of this fiscal year, about $7.7 million, for equipment and infrastructure projects. That figure assumed the tax would go into effect May 1.

Even if the council had approved it, Jones said, it’s too late to begin collecting the tax by that deadline.

He said he needed to reformulate the proposal based on a later start date.

After Jones requested the item be removed, Councilman Fred Richardson moved to table the matter until May 8.

Councilwoman Gina Gregory, though, said the matter should be tabled indefinitely.

In an interview before the meeting, she explained why.

“If we had voted on it today, I would have voted no, because I cannot support a 1-percent increase,“ she said.

Gregory said there was too much doubt and uncertainty in the community to move forward with a vote right now.

She said the city should put together a citizen review board to go over the city’s finances, thereby allaying fears in the community that Jones is manipulating the numbers.

Gregory continued to say that the city needs to address some of its systemic financial issues as well, particularly the Police and Fire Pension Fund and the employee health plan, both of which will contribute millions of dollars to the city’s projected deficit in 2013.

If those things were accomplished and there still was a deficit, she said, she would consider some kind of a tax increase, but certainly not the full percentage point that the mayor has requested.

In response to Gregory’s concerns, Richardson withdrew the May 8 date, asking only that the issue be tabled.

He went on to make a speech of his own.

Richardson said that any doubts in the community are the result of the council’s relentless calls for additional audits and endless public questioning of the mayor’s financial information.

He also said that the city’s sales tax rate has been stuck at 9 percent since the late 1980s. Since then, he said, the price of all manner of other goods and services has increased.

“Until Gabriel blows his horn, until Jesus himself returns, you are going to hold Mobile at 9 percent,” he said.

Richardson did not point out that the bulk of Mobile’s revenue comes from sales tax. All things being equal, the city’s revenue should therefore track with inflation without increasing the rate itself.

Even after Richardson withdrew the date certain for the tax vote, his motion to table it barely squeaked by on a 5 to 2 vote. Council members Bess Rich and John Williams cast the dissenting votes.

Rich, in a prepared statement, said it was disingenuous to continually describe Jones’ tax proposal as “a penny tax.” She pointed out that, while the increase may be of a single percentage point, raising the rate from 4 percent to 5 percent amounts to a 25-percent increase in the tax take.

At $30 million in expected additional revenue, that amounts to 3 billion pennies, she said.

Rich also questioned the $29 million deficit that Jones’ staff has projected for fiscal 2013, calling it a “moving target.”

Williams said that he was tired of the council’s dithering. If the measure fails, so be it, then the process of finding another solution can start, he said.

“This idea that we can put it off and find a way forward has not proved to be true over the last three months,” he said.

For his part, Jones agreed that there needs to be some element of trust between the council and his office if the problem is going to be solved.

He told the council members that, if they still had questions about how he arrived at his budget figures or where the city was spending its money, they either hadn’t read the pages and pages of information that he’s given them or they didn’t understand it.